Law:

Section:

Section 4(1)(c) of Gift-tax Act - Deemed gift  Merely because assessee-partner on his retirement from firm abandoned or did not claim any share in investment allowance reserve, same shall not be treated as a deemed gift within meaning of section 4(1)(c) The assessee was a partner in a firm having one-fifth share in the profit or loss of the said firm. The assessee retired from the partnership firm with effect from 1-4-1986, and on the date of retirement, the credit balance in the capital account of the firm was Rs. 2,11,637 which was transferred to the unsecured loan account. The assessee received his share from the capital assets of the firm. However, he did not claim his share in the investment allowance reserve. The case of the assessing authority was that the assessee relinquished his claim to the extent of Rs.1,99,211 which was his share in the investment allowance reserve. The assessing authority, therefore, treated this amount as deemed gift under section 4(1)(c). Held that in view of the decision of the Supreme Court in merely because the assessee partner on his retirement from firm abandon or did not claim any share in the investment allowance reserve, the same shall not be treated as a deemed gift within the meaning of section 4(1)(c). JUDGMENT By this reference under section 256(1) of the Income-tax Act, 1961, the following question has been referred to this court : "Whether, on the facts and circumstances of the case, the Tribunal was justified in law to hold that the abandonment of Rs. 1,99,211 which is the share of the investment allowance reserve by the assessee in favour of the firm, i.e., M/s. Kapoor Brothers is not a deemed gift under section 4(1)(c) of the Gift-tax Act ?" The facts of the case lie in a narrow compass : The assessee was a partner in the registered firm M/s. Kapoor Brothers having a one-fifth share in the profit or loss of the said firm. The assessee retired from the partnership firm with effect from April 1, 1986, and on the date of retirement, the credit balance in the capital account of the firm was Rs. 2,11,637 which was transferred to the unsecured loan account. The assessee received his share from the capital assets of…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492